In this environment of elevated uncertainty, with fundamental risks still looming on the horizon, clients can be willing to listen to any sort of investment forecast.

However, the desire to follow "expert advice" often strengthened by adverse market conditions, represents a dangerous strategy.

The problem is that investors are often sold investment strategies and asset allocations based on short-term predictions about the markets that dominate today’s financial media.

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Economic science and models of financial markets have a poor record of predicting highly volatile time series, especially over short periods such as days or weeks.

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To illustrate this point, consider the widely respected New York-based economist Nouriel Roubini, who correctly warned of the recent housing and market crises.

On May 20 of last year, he went a step further and predicted on CNBC that stocks would shed another 20 per cent in the weeks to come.

Roubini warned that cash and other such investment vehicles would be the best bet for investors, as stocks, commodities and gold would fall. In the 12months since the prediction, instead of dropping, the S&P has actually risen by about 20 per cent. Commodities and gold have also appreciated in value.

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Perhaps Warren Buffett was right when he said: ‘‘We have long felt that the only value of stock forecasters is to make fortunetellers look good. …

So why do people keep listening to short-term forecasters, and keep paying large commissions and fees for advice that has very little value because so much of the investment returns are explained by random, unpredictable events?